Trade Strategy 10.01.14

September by most metrics was a tough month, whether an investor, swing-trader, or day-trader…Volatility increased sharply but not excessively…Algorithms, which account for more than 70% of daily volume ran wild in both directions, causing intra-day moves to be “fast n furious”. Not necessarily the best formula for day-trading…Directional movement is required, but when price rockets up or down for 22 “unanswered” handles without a tradeable pullback…something has changed. As October begins, we remain dedicated to staying the course implementing our proven Trade Methodology.

Today is Cycle Day 1 (CD1) which typically experiences general weakness as price probes for a new “secure cycle low” from which to stage the next cycle rally. Measured from prior day high (1978.25) less Average Decline on CD1 (17.50)..price has reached and is currently trading at initial price target of 1960.75. It will be important for Mr. Market to hold these levels on a closing basis, otherwise forced long liquidation could develop.

Average Range on CD1 = 17.50; Max Range = 21.75; Odds of Decline > 10 = 70%; Odds of Decline > 20 = 41%; Initial Price Target = 1960.75; Expanded Price Target = 1956.75.

***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: The 3D CPZ is 1967.75…IF price can clear this level, THEN there is a 55 % chance of reaching 1972.50 – 1974.50 zone…Beyond this zone targets Prior Day High at 1978.25.

Scenario 2: Failure to convert 3D CPZ (1967.75) suggests buyers have retreated and price will need to probe lower for a new secure cycle low. Violation and conversion of Prior Day Low (1961.00) targets 1957.75 – 1955.00 STAT X Zone. Failure to find responsive buyers in sufficient quantity targets lower Xtreme at 1950 handle.

Trade Strategy: With intra-day volatility on the rise with swings of increased magnitude in either direction, our main trade strategy will be to remain open and flexible to two-side trade, both long/short from key Decision Point Pivots (DPP). As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined   ALWAYS USE STOPS!

Good Trading…David

Habitude Four
I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.


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